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Business and Policy Areas
Business and Policy Areas

New Study Finds That Tuition is Covering a Greater Share of Total Educational Cost

January 29, 2009

According to the study, Trends in College Spending: Where Does the Money Come From? Where Does It Go?institutional spending shifted from classroom instruction to academic support, student services, administration, and maintenance.  Between 1995 and 2006, the percentage of institutional expenditures devoted to instruction decreased for all types of institutions, while spending on student services and administration and support increased.  At independent research universities, the instruction share of expenditures went down from 62.3 percent of the total in 1995 to 57.9 percent in 2006, but in the same time span the share spent on administration and support rose from 30.1 percent to 32.9 percent.

The study also shows that public and independent colleges and universities are shifting revenue sources.  While public support for higher education institutions continues to decline, tuition and fees, private gifts, and grants and contracts are rapidly becoming the primary source of funding.  From 2002 to 2006, the share of educational costs covered by student tuition rose from just over one-third to nearly one-half at public four-year institutions. At private bachelor’s and master’s institution, students’ tuition and fee payments account for between 75 and 85 percent of the total cost of education.

The report highlights how the shifts in revenue and expenditures could result in inequities in educational financing.  The lowest number of students attend private research universities, but these institutions spend the most per student on instruction. On the other hand, the largest number of students attend community colleges, which spend the least amount per student on instruction.  There is a clear inverse relationship between headcount enrollment and average education cost per full-time equivalent student.

NACUBO staff resource is Santiago Merea